What should I do if I can't direct deposit money into savings accounts?

Q: What should I do if my bank only allows direct deposits into checking rather than savings accounts?

A: It may be time to look for another bank, or at least reassess how much your current bank is worth to you.

To be sure, savings banks are not meant to be heavily transactions-oriented. In fact, Federal Reserve regulations limit them to no more than six withdrawals a month, but the key thing here in your situation is there is no such limitation on the number of deposits. So, there is no regulatory reason to forbid direct deposits into a savings account, even if the nature of your work (e.g. someone with multiple employers) is such that you receive frequent paychecks over the course of a month.

Absent any regulatory issue, one has to assume refusing to accept direct deposits in savings accounts is a matter of your bank's policy. Ordinarily, banks would be keen to attract deposits and unlikely to put up barriers to prevent people from sending money their way, but these are not ordinary times. A combination of low interest rates, a lackluster lending environment and new accounting regulations have made some banks feel they already have more deposits than they need. This may explain your bank's policy, but you do have alternatives.

3 ways to get around checking-only direct deposits

If you have restrictions on deposits into savings, here are three alternatives:

1. Transfer money after each payday

One alternative is to get into the habit of transferring money from checking to savings every time you get paid. This would depend on getting yourself on a regular schedule to make these transfers. Though, it might help if your employer gives you a pay stub or other notification of payment to serve as a reminder. It would also help if your bank has online features that would allow you to make these transfers from a computer or mobile device.

2. Switch to a new bank

Even if these transfers can be done efficiently, having to make them in the first place does create extra work for you, so you have to decide how much your bank is worth to you in other ways. For example, since your the savings account is causing extra effort, ask yourself whether that savings account compensates you with highly competitive interest rates. These days these would be something in the 0.75 to 1.00 percent range. If not, it might be worth it to switch to a new bank.

3. Make transfers between banks

On the checking account side, free checking has become scarce enough that having it might be sufficient incentive to stick with your current bank. Of course, you could still move your savings account to another bank and make transfers between banks, unless the savings account balance is helping you to qualify for free checking.

Your bank's fees and interest rates may well be competitive enough to make it worth your while to make these regular transfers between checking and savings yourself, but you won't really know how competitive those fees and rates are until you make some comparisons with other banks. In short, it seems likely that this particular policy of your bank will cause you to take a look at what some of their rival banks have to offer.

Comment: Does your bank have all the checking and savings account features and rates you want?

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